Ep. 130 - Mastering Profit First: A Comprehensive Guide to Allocating Funds for Financial Success
Profit First Nation
How to Start a Business and Make Money
If you haven't established yourself as a business, then guess what? You don't have a business. Talk to an attorney or talk to a CPA to help you determine what is the best structure for you. Your five core profit first accounts should be business checking accounts. Don't get lazy and bypass having the profit and tax account at your primary bank.
In today's episode, Danielle Mulvey guides us through the fundamental process of allocating funds in the Profit First system. Additionally, she highlights the contrast between Profit First and Advanced Profit First. Danielle provides an extensive overview of the three phases and the twelve steps that lead to financial success. It's important to note that Profit First is not a "set-it-and-forget-it" approach. The podcast also includes answers to viewers' questions. Make sure to have a pen and paper handy, as valuable tips are shared in today's episode.
IN THIS EPISODE:
- [02:42] Danielle explains why you should do your allocations twice a month
- [04:48] There are five common Profit First accounts, and it’s essential these accounts are opened.
- [07:48] Danielle answers a viewer's question about the necessity of having a financial accounting system to go along with the banking accounts.
- [09:31] What is the difference between Profit First and Advanced Profit First, and what other accounts are required
- [14:25] Danielle answers the viewer’s questions about how to add a reserves account to purchase inventory, and she explains the difference between the cost of goods and operating expenses
- [20:09] Danielle explains how to implement Profit First step by step
KEY TAKEAWAYS:
- If you don’t open the five bank accounts suggested by Profit First, you don’t have a business. You have a hobby.
- Advanced Profit First is strongly advised when you pay sales tax or when you have the cost of goods.
- Don’t overspend on marketing. Only spend what is allocated in the marketing account.
RESOURCES:
Profit First Professionals - Website
ABOUT THE HOSTS:
Danielle Mulvey is a former flight attendant-turned-entrepreneur and owns multiple businesses doing $50 million in annual revenue. She is one of the exclusive, select group of Mastery-Certified Profit First Professionals worldwide and the go-to “HOW TO IMPLEMENT” workshop facilitator for Profit First and WSJ Journal best-selling author Mike Michalowicz following his keynote speeches. Danielle is currently running multiple businesses, from start-ups to mature businesses with 10-year plus track records and revenues ranging from $1M to $40 million in annual revenues and is a certified numbers geek about Profit First, leveraging the DIY cash management system for small business to achieve maximum profitability. She can personally guide business owners to achieve maximum profitability based on her 25 years of experience as an entrepreneur who has been there and done that.
Additionally, Danielle authored the book The Rapid Read™ Guide to The 5-Star Employee Rating System™ and is currently collaborating with Wall Street Journal best-selling author Mike Michalowicz on his new book, to be released in Q1 2024, titled ALL IN: How Great Leaders Build Unstoppable Teams.
Mike Michalowicz is an entrepreneur and New York Times and Wall Street Journal best-selling author of Profit First, The Pumpkin Plan, SURGE, Toilet Paper Entrepreneur, Clockwork, Fix This Next and Get Different. BusinessWeek called Toilet Paper Entrepreneur, a business cult classic. His books have been translated into ten languages, and Mike has had the privilege to speak on stages worldwide because of his passion for connecting with entrepreneurs.
As the founder of Profit First Professionals, he empowers accountants, bookkeepers, and business coaches with the tools and techniques to maximize client profitability, allowing them to uplevel from being one of the 83% of small businesses operating check-to-check and struggling to be profitable to becoming one of the 17% of thriving and highly valuable businesses with cash in the bank to correlate to profitability. Mike also co-founded the business growth consultancy Provendus Group and has successfully founded, built, and sold two technology service-based companies. He is passionate about sharing his experiences and advice with entrepreneurs and sits on formal and informal advisory boards while maintaining relationships with angel and early-stage investors.
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